Bullock Cart to IT Bandwagon: India’s IT experience

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GE Capital shows India`s IT-enabled service might

Tue 06:21 AM

By Robin Elsham

BOMBAY, Dec 4 (Reuters) - To appreciate India`s ``enormous potential`` in IT-enabled services, look at GE Capital.

With 10,000 employees, GE Capital Services India, a unit of the financial services arm of U.S.-based dynamo General Electric Co GE.N, has grown rapidly to become the largest IT-enabled services provider in India.

Last year alone the Indian unit hired 6,000 employees, prompting the company to post signs around its premises warning Trespassers Will Be Recruited.

``I can`t tell you how much we depend on India in GE,`` Pramod Bhasin, president of GE Capital India, said on Tuesday, in a keynote address at the start of a two-day seminar in Bombay on ``Indian Private Equity Investing in the New Environment``.

Private equity refers to investing money to buy an ownership stake in an unlisted company, with the aim of later taking it public or selling it to a strategic investor at a big profit.

According to data compiled by seminar organiser Asian Venture Capital Journal, India ranked second in Asia in the amount of private equity it attracted over the past 11 months.

It pulled in $1.1 billion, trailing only the $1.86 billion pumped into Japan in the January-November period. And India topped the table for number of deals financed at 91.

MOST PROMISING FIELD

Bhasin told the seminar, attended by representatives of many of Asia`s biggest and most active venture capital funds, that the best investment in India is IT-enabled services.

``I think there is no better or more promising area for India. It plays to India`s sweet spot.``

IT-enabled services involve using telecommunications to provide virtually any sort of service, from call centres handling customer account queries to product development and design services.

``At GE we`re at the stage where we believe all back-office operations should be carried out in low-cost countries,`` Bhasin said.

GE Capital India is already performing accounting, claims processing, credit evaluation and a host of other functions for 80 GE branches around the world.

``We don`t see why in India we shouldn`t go from 10,000 (employees) to 15,000 to 20,000,`` Bhasin said.

Many multinational companies have already set up service centres in India, enabling the Indian IT industry to continue growing strongly the past year even as growth worldwide slowed to a crawl.

In an earlier address, Daniel Schwartz, publisher of the Asian Venture Capital Journal, neatly summed up the evolution of India`s global economic significance over the past decade, concluding India is becoming ``the world`s back office``.

``In the early 1990`s India was a low-cost manufacturer, then it became the world`s software services developer and now we are seeing a transition to India as the world`s back office or provider of IT-enabled services.``

India is ideally placed to dominate the IT-enabled service field, Bhasin said, if it continually works to improve efficiency in the ``commoditised`` end of the industry, and to move up the value-added ladder by offering more sophisticated services.

``We (India) are so far ahead of the rest of the world in terms of English and costs. The market is ours to keep.``

A subsequent seminar speaker, W Bowman Cutter, a top economic policy advisor to former U.S. President Bill Clinton, referred to ``a world where China becomes the world`s manufacturing entrepot and India becomes the world`s IT-enabled services entrepot``.

CHINA THREAT

But in IT-enabled services, Bhasin said India faced a threat, especially at the lower end of the service spectrum, from China. It is pushing to develop an IT service industry my introducing English-language instruction and stressing computer education in schools.

``Will they catch up? Yes, within four to five years. I have never seen any country develop so fast.``

So India must keep ``going from simple stuff like call centres, to more complex operations.`` Such services would employ highly trained professionals to provide cut-rate services in areas like engineering, medical transcription, medical and legal consulting, and accounting.

``It`s about using the best brains in India to deliver services,`` Bhasin said, referring to the potential provided by population of one billion and a highly developed network of universities, technical colleges and research institutes.

Simultaneously he said Indian IT-enabled service providers need to continually work to reduce costs to safeguard their leadership position against market entrants from places like China and the Philippines.

``Our objective (at GE Capital India) is to take costs down 15 percent a year,`` Bhasin said.

He added the Indian government must also improve the nation`s industrial infrastructure to ensure the IT service industry continues to prosper.

``Tomorrow when pressure on margins is greater, we won`t be able to afford double backups on power and phones,`` Bhasin said, referring to the redundant system almost all top Indian companies employ to cope with power blackouts or phone service disruptions.

Bhasin said Indian service providers needed to offer cost savings of 30 to 40 percent to get American and European companies to outsource operations to them.

http://reuters.activebuddy.com/s?id=DSDVOBOM20O6

There is a lot of hype surrounding the emergence of India as an IT Super Power, to which the article has rightly drawn attention. However,it must be said that said that India has set its priorities right when it caught up with the IT wave in the eighties. What is more edifying than witnessing countries like Germany and Japan soliciting Indian assistance to fine tune their IT infrastructure!

The other significant feature of the IT revolution in India has been the commitment shown by the political leadership, specially in the southern states of Andhra Pradesh, Karnataka and Tamil Nadu. If the Pakistani leadership also exihibites the same degree of commitment, then there is no reason why similar progress in this area could not be achieved there.

siva

I would like to congratulate Q. Isa Daudpota for writing a good summary of India`s IT standing. I just like to make it clear, that the understanding that IIT graduates are something super genious or even genious is absolutely wrong. They get high GRE scores because they have a network at IITs which collects the questions from different GRE exams and provide it to the students. The IIT students learn those questions and got high scores. On the bases of those get they get full scholarship in US universities, but their performance is below average. This is my personal experience, and I wish to see any bright Indian student who can compete.

The only thing Pakistanis need is to become active and leave laziness and politics. I am ready to establish a VLSI and Computer Architecture institute in Karachi and teaching through web but no one is ready to take an initiative. In NED university everything is under politics and their are different groups in teachers. I do not know about the other engineering universities. If anyone is interested please contact me.

Thanks

Aamir A. Farooqui

aamir.homepage.com

Pankaj:

Thanks for the detailed stats. I am not sure about the conversion rates of Pakistani Rupee to Indian Rupee, but your fees fall under the ``moderate`` category. My reason for asking the question was to address the very high fees in the undergrad schools (LUMS and GIK) in Pakistan.

They can be compared to some universities in US in terms of their high fees. Only few can afford these. Though it should not imply that other state run universities are not producing candidates who are doing pretty well in their respective fields in US.

The fact is pretty obvious that Indians in general do not move around in the world based on individual success. The other major irony in our community is keeping the information to themselves. If someone finds an assistantship they will rather keep their mouth shut than let anyone else know, how/where to apply. I see that as some kind of insecurity. But that varies from person to person. Among Indians the situation is very different. Before a chap will finish his tenure, he will have another prospective candidate in line to take up the assistantship. I have observed that during my grad program and was quite amused. Besides my amusement, I must mention that Indians in that respect have very strong sense of responsibility or nationalism(whatever).

I guess unless each Pakistani sitting abroad does not take up the responsibility of educating/assisting/mentoring/supporting at least one financially handicapped Pakistani back home, we will remain where we are. Simple!

I will also agree with Hazrat-ae-Critic[Ms/Mr Temporal]that we should not focus on IT only. Agriculture/Textile being another important area as majority of our population lives in rural areas and that is their way of supporting themselves. While reading few thoughts of some other Pakistanis on a mailing list, I found them very frustrated as they came up with many strategies and proposals and were called upon by some govt. related departments for enlightenment but then ???? Nothing happened!

So probably, it is the Time for Concrete Steps than just Proposals! Not Sure but Positive!

Author writes ``and of Ramalinga Raju, who was behind Intel`s Pentium chip.``

As far as I know Ramlinga Raju is from Satyam

PM #37

To understand the psyche of Indian or for that matter Pakistani, you have to realize that these small opportunities for Americans are big break for us. As a people, we are still not well off.

It brings good fortune to the whole family.

To put it another way, most people, even professionals have a yearning for ``Dubai Chalo`` or make fortune in foreign country.

It is sad that Indians are bigots and instead of thinking in terms of people, which are the only reality, are trying to be a part and parcel of hegemonist designs and North South divide. (i.e are content with being part and parcel to get a very small piece)

As one with a very weak background in Economics, I have a few questions that may seem naive. Nevertheless...

1. How does the production of world class techies help a country`s economy (long and/or short run) when most of such gurus end up settling down in the West?

2. Given that most of the thousands of software programmers and engineers work for foreign concerns (both in India and abroad) what are the real benefits to the Indian economy (Again, I assume that most of those on H1 visas seek to obtain Green Cards (permanent resident status) with a view to settling in the US)?

3. Is there no opportuity cost (both to the individual and to society at large) when a significant number of a nation`s `brightest` (or simply those with the most opportunity) pursue careers along lines for which little infrastructure exists within the country, leading to the inevitable brain drain?



Someone mentioned that one reason Americans, per capita, are under-represented in the IT (esp. software development) field is due to their laziness. I think a more plausible reason would be that young Americans, while surely not lacking in drive or ambition, tend towards etiher the entreprenual side of things. Generally software development (the type that most H1s are granted for) is considered mechanical, tedious and sterile... not very attractive for a people of verve and ambition. So guess who gets to do ost of the `dirty work`?

Also, many of the most intelligent young people in america pursue careers in the Arts, Humanities or fields generaly off the beaten path. Long term benefit: The nation retains its soul, despite the ugly facade of unbridled greed we often see on TV and in the press.

I wonder if the Indian technology frenzy without paying any heed to the cost in terms of investment in the Arts and Humanities, in Public Service and Education at large may not lead India to a deeper identidy crises once the dust has settled and we realize that the country, really -- where it matters -- hasn`t changed much-- save for the acquisiton of a new ut still small bourgeoisie.

This is in response to Zahra`s post dated Jun 20. Since I am myself an IIT graduate, I can perhaps tell more about IIT. The fees currently charged in IIT Kanpur( and the others) is Rs 15000 around per semester. IIT Kanpur was established in 1960s by an IIT act in collaboration with a consortoium of nine top univs of USA including MIT, Stanford etc. These univs are rightly called the best technical institutes of Asia and top class in the world. IITs are simply too much adulated so I will not speak any more about it but see Outlook India, June issue 2000 on the net(Check www.samachar.com magazine section for some details).About Computer Science students, almost all of them get overseas job directly after BTech and are most sought after group in the world.

I am a Chemical Engg. Of 7 of my classmates which landed up here last year, Pawan kumar tops Stanford(followed by two IIT Delhi students with Chinese and Americans nowhere in picture, Ankur tops Georgia Tech and me here in Houston....). Okay enough, but I am proud of my classmates who almost invariably end up toppers wherever they go. And these are not cooked up Statistics. Our senior Jatin Mishra is in top 3 in MIT currently. Every year this success story is replicated. No wonder Indians(and IITians especially command so much respect in the world). And silicon valley there is just too much to be mentioned here.

Cheers

Q. Isa Daudpota,
a few more intelligent people
like you and Pervez Hoodbhoy and that country
that some of us still love (is it safe to say
this on CHOWK?) may still have hope.
Pakistanis need to pursue something that ensures
a collective gain. IT is successful in India
and can be in Pakistan because it needs far less
Capital investment to get started. It does however
require investment in educational institutions which have been weakened in Pakistan but can be revived.

Ras

In the mid `80s a US tech multinational came down to B`lore with a satellite dish and set up a design center employing Indians all connected up to its main computers across the seven seas. GOIndia waved hands, uplink permissions and all, so the dish was sold to VSNL(Videsh Sanchaar Nigam Limited, now a highly profitable govt-owned co) and business continued in the heart of the city under auspices of inspired terminology, ``a virtual offshore software technology park``.

Fifteen years later, ride a bus from Hosur(35km away) to B`lore and see the number of tall new buildings leased by so many companies all with `data dishes` on their roofs among those grapevines and dusty roadside municipalities. Now in places like Thiruvananthpuram and Agra too, there are software technology parks.

Very true, the success has been due to the government keeping out. A big interference has been VSNL, which has owned the monopoly on high-speed data links and has done very well for itself, but it may be the most despised co among IT enterpreneurs in India. (sac, this one to you).

But some govt policies did work. It seems that India has been producing a lot more educated people than it had opportunity for, for many many years.

Whether the IT boom in India lasts or not I feel is less important than the overall effect. There used to be so many jobseeking ads by even EE grads in local newspapers, hopefully some of those grads are now employed.

If college curriculums are being updated across the country to catch the boom, good. If the CMs of UP/Bihar feel a even a twinge of envy when southern CMS make the news due to the infotech hype, well and good. Maybe next time the Samajwadi Party? of Mulayam Singh Yadav will not make it an election platform in UP to repeal laws against cheating in exams. Maybe a number of student organisations in the Hindi heartland will think once(twice is too much to expect) before delivering their political patrons votes for question papers.

If the connection between good governance,civic order, thence to good investments, leading to greater power begins to becomes apparent to the most thick-headed, I say lets not look at this gift horse too closely in the mouth.

Sadhana

Actually, India does produce branded software, but its mostly industrial/commercial software, not that much oriented towards consumer software. Specially within the banking sector and hardware microcoding software, its pretty well known. It does suffer from quality problems, but which software doesnt :-)

cheers

bd

There is no denying it, we need a lot of catching up in the computer industry in Pakistan. When I was growing up there all the high school students wanted was to either get into medical schools or engineering colleges. But I am sorry to say that I found out first hand that the standard of education in the engineering schools is nothing to be proud of in Pakistan. Also there was no computer science department infact no computer facilities available to the students. And it is also true that Indians somehow had the advantage of having these facilities in India. But its not too late for Pakistan. The first step is not to deny that we are behind and then do something about it. There are new fields opening up and internet is changing the world, we cannot afford to lag behind.

The government should invest in Pakistan`s future, in education. Yes we are a poor country but so is India, infact there are a lot more poverty stricken people in India, people who have no education. But judging from the number of Indians in the software indusry in US and also the number of International companies who have opened thier offices in India, at least some percentage of Indians were able to benefit from the good engineering schools in India.

What is the point in India being the IT leader. With Indian population soaring day by day (it will be 1.6 million in next 50 years), India will still be the the poorest country in the world.

--

33-year-old Indian gets 24th child

DUM DUMIYA, India, June 21 (AFP) -

The reponsibilities of parenthood appear to rest lightly on Mohammed Abdul, a labourer in northeast India, who has just fathered his 24th child at the tender age of 33.

``No regrets at all. It is all Gods grace,`` Abdul told AFP, as he cradled the latest addition to his family, a baby girl, in the village of Dum Dumiya -- a remote Muslim hamlet in Assam state.

The baby`s mother, 23-year-old Jahanara, is Abdul`s third wife.

He first married at the age of 14 and had six children before taking a second wife. He married Jahanara when she was only 11 years old.

``Jahanara fell in love with me and we got married,`` Abdul said. ``Eight of my sons assist me in earning a livelihood. My eldest son should be 16 or 17 years of age. I dont remember exactly.``

Abdul now divides his time between his three wives and two dozen children.

Indian women can legally only marry over the age of 18, but child weddings are still common in rural areas.

Re: 29

I agree that most of the IT work done in India is low end, and you dont see many finished commercial products coming out with `made in India` brand, but before you could do that, you have to get the brand identification around the globe. And you have to agree hat `India` was not much of a brand globally till very recently. So, first, and most difficult thing, is to get the capacity and get your brand recognised (the hype, as you call it). In case of India, that is done, a poor, underdeveloped, third world country has come to be recognised as one of the frontrunners of the cutting edge technology of present times. Rest is going to be not so difficult. It is just a matter of time before finished products start coming out of India too. It is building the foundations that takes time and effort.

For comparison, you could think about Japan, who started with making electronic chips for American companies, or Korea, Taiwan, Malaysia... all of these started with low end products. Once they formed their brand recognition, they came out with their own products.